Flexible spending accounts and health savings accounts can help individuals and families deal with anticipated healthcare expenses. However, funds in FSAs will be lost if not spent in the applicable tax year, while HSA funds can grow from year to year.
Flexible spending accounts (FSAs) and health savings accounts (HSAs) are each valuable — and potentially money-saving — tools in a strategy to cover your annual healthcare expenses. But choosing the wrong one could end up losing you money, a mistake you will certainly want to avoid.
Both FSAs and HSAs are “tax-advantaged savings accounts that allow you to pay for qualified medical expenses, such as doctor’s visits and prescription medications, with pretax funds,” according to U.S. News & World Report. And for men who use erectile dysfunction medications such as Viagra and Cialis, the good news is that both FSA and HSA funds can be used to buy such drugs.
Employers Administer FSAs
On the plus side, FSAs and HSAs “offer avenues to reduce your tax load to pay for expenses that you’re probably going to incur regardless of your situation,” certified financial planner Evan Beach told U.S. News & World Report.
However, the pretax money you plow into your FSA account must be spent in full within the tax year for which it qualifies. (Depending on the employer administering your FSA, an extension to March 15 for tax-year spending may be available.) Any funds left in the account at year-end — or the end of the extension — will be forfeited.
As previously noted, FSAs are administered by your employer and subject to a “use it or lose it” penalty if the funds are not fully spent in the applicable tax year.
Individuals Administer HSAs
By contrast, HSAs are usually administered by the individual who is the beneficiary of the account. And they are allowed to grow from year to year. This means there is no penalty if you haven’t spent all the funds in your account during a single tax year.
The funds accumulated in these pretax savings accounts can be used to pay for a wide array of healthcare expenses, including such related costs as transportation to medical appointments and sales tax, as well as shipping and handling fees, where applicable.
Ineligible Healthcare Expenditures
However, be aware that funds from a healthcare FSA may not be spent for cosmetic procedures and surgery, teeth whitening, expenses reimbursed by an insurer or other health plan, and family or marriage counseling. Also not covered by FSA funds are insurance premiums, over-the-counter medications, including dietary supplements, and personal care items, such as toothpaste and shaving cream.
Although funds from an HSA can be used to cover a host of healthcare expenditures, including dental and vision expenses not covered by your health insurer, funds used for nonmedical purposes are subject to taxes plus a 10 percent penalty.
Who Qualifies?
To qualify for an HSA, you must be covered by a high-deductible healthcare plan or a self-employed contributor to such an account. All employees of employers offering FSA plans are eligible to participate in FSA plans, but such plans are not available to those who are self-employed.
The maximum annual contribution to an FSA is $2,700. For an HSA, the maximum annual contribution is $3,500 for an individual and $7,000 for a family.
Stock Up on ED Drugs
Because funds from either of these healthcare savings accounts can be used to purchase ED drugs, FSA savers nearing the year’s end might want to stock up on extra ED tablets to ensure all their funds are utilized.
Ordering your ED drugs from eDrugstore.com, a longtime online prescription drug service could help you to save both time and money. Prices at eDrugstore cover not only the medications themselves but added-value services as well. Such services include free shipping and complimentary online consultations with licensed U.S. physicians. To learn more, pay a visit to eDrugstore’s Erectile Dysfunction page.
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